Dr. Harvey's Financial Glossary

Thursday, March 11, 2010

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Payments pattern: Describes the collection pattern of receivables. The pattern might describe the probability that a 72-day-old account will still be unpaid when it is 73 days-old.
Payments System: Collective term for mechanisms (both paper-backed and electronic) for moving funds, payments and money among financial_institution throughout the nation. The Federal Reserve plays a major role in the nation's payments system through distribution of currency and coin, processing of checks, electronic transfer of funds and the operation of automated clearinghouses that transfer funds electronically among depository intitutions; various private organizations also perform payments system functions.
Payoff diagram: In option pricing, a graph of the value of the option position at expiration as a function of the underlying asset price.
Payoff profile: The slope of a line graphed according to the value of an underlying asset on the x-axis and the value of a position taken to hedge against risk exposure on the y-axis. Also used with changes in value. See: Risk profile.
Payout period: The time period during which withdrawals from a retirement account or annuity are paid.
Payout ratio: Generally, the proportion of earnings paid out to the common_stock stockholders as cash_dividend. Morespecifically, the firm's cash dividend divided by the firm's earnings in the same reporting period.
Pay-to-play: Attempts by municipal bond underwriting businesses to gain influence with political officials who decide which underwriters are awarded the municipality's business.
Pay-up: The loss of cash resulting from a swap into higher-priced bonds or the need/willingness of a bank or other borrower to pay a higher rate of interest to get funds. Used in the context of general equities. (1) When an investor who wants to buy a stock at a particular price hesitates and the stock begins to rise; instead of letting the stock go, he "pays up" to buy the shares at the higher prevailing price. (2) Buy shares in a high-quality company at what is felt to be a high, but supportable, price due to its quality.
PBGC: See: Pension Benefit Guaranty Corporation
PC: See: Participation certificates
P-coast: Refers to west coast listed equity securities. See Also: Pacific Stock Exchange
PE: The ISO 3166 country code for PERU.
Peak: The high point at the end of an economic expansion until the start of a contraction.
Pecking-order view (of capital structure): The argument that external financing transactions costs, especially those associated with the problem of adverse selection, create a dynamic environment in which firms have a preference, or pecking-order of preferred sources of financing, when all else is equal. Internally generated funds are the most preferred, followed by new debt, and debt-equity hybrids. Finally, new equity is at the least preferred source.
PEFCO: See: Private Export Funding Corporation
PEG Ratio: See: Prospective earnings growth ratio
Pegged exchange rate: Exchange rate whose value is pegged to another currency's value or to a unit of account.
Pegging: Making transactions in a security, currency, or commodity in order to stabilize or target its value through market intervention.
PEN: The ISO 4217 currency code for the Peruvian Nuevo Sol.
Penalty clause: A clause found in contract agreements that provides for a penalty in the event of default.
Penalty tax: A federal tax that can be applied if a plan holder does not meet certain requirements when making withdrawals from a tax-advantaged retirement plan (for instance, if the plan holder has not reached age 59-1/2). This penalty tax is owed in addition to any income taxes due.
Pennant: A chart pattern resembling a pointed flag, with the point facing to the right, which shows a diminishing variance of price.
Penny stock: Used in the context of general equities. Stock that typically sells for less than $1 a share, although it may rise to as much as $10/share after the initial public offering, usually because of heavy promotion. All are traded OTC, many of them in the local markets of Denver, Vancouver, or Salt Lake City.
Pension Benefit Guaranty Corporation (PBGC): A federal agency that insures the vested benefits of pension plan participants (established in 1974 by the ERISA legislation).
Pension fund: A fund set up to pay the pension benefits of a company's workers after retirement.

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